Commentary and analysis of commercial, business and intellectual property (IP) law, sports law, complex civil litigation and occasionally a general legal tip.

Saturday, February 9, 2013

Think you have a good business name?: On deceptive and deceptively misdescriptive trade names.

In the line of work in which I was able to gain business experience, it was not
uncommon for me to see trade names ("marks") that misdescribed the goods
or services ("goods") provided. I would most commonly see marks that
misdescribed goods when proprietors would devise one suggesting a connection
with an environmentally-friendly or "green" product. In the absence
of legal action from another person or business for infringement, people can
pretty much use whatever trade name they want. However, that does not entitle
them to trademark protection under the Lanham Act.

Title
15 of the U.S. Code contains the Lanham Act, which is the federal statutory scheme
for registering and protecting trademarks. In general, "inherently
distinctive" marks can gain federal trademark protection via registration,
and descriptive or generic marks cannot. As long as a mark is not "merely
descriptive" of the goods or services provided, a descriptive mark can
become protectable upon showing of "secondary meaning." Inherently
distinctive marks are either suggestive of the goods provided, arbitrary or
fanciful.

Suggestive
marks require imagination, thought or perception to reach a conclusion as to
the nature of the goods or services they identify. Trademark Manual of Examining
Procedure (TMEP) § 1209.01(a) (October 2012). Arbitrary marks comprise existing
words but when used to identify particular goods or services, they do not
describe an ingredient, quality or characteristic of the goods or services,
e.g., "Apple" for computers. Id.
Fanciful marks comprise terms invented solely to function as a mark. Id.

A
mark that has attained secondary meaning implies that the mark originally did
not have significance in the minds of consumers, but use of the mark in
commerce has cultivated a source identifying connection in consumers' minds. If
a mark is originally descriptive, but several years later consumers immediately
identify the mark with the markholder's products or services, it can be
registered and receive federal trademark protection.

The
caveats I initially identified are deceptive and deceptively misdescriptive. I
commonly see deceptive or deceptively misdescriptive marks in commerce. Now,
this will not normally cause an issue unless the proprietor tries to register
the mark, but the markholder's decision to select a deceptive or deceptively
misdescriptive trade name may have been changed if he or she had known that the
trade name they were selecting cannot ever receive federal trademark protection.

When
an individual starts a business, it is axiomatic that they will try as hard as
they can to make the business as successful as they can. Apple, Microsoft or
Coca-Cola were not started with the intention to only compete in a small
geographic area. If they had selected a mark that was permanently
unregistrable, and could not ever receive federal trademark protection, they
would either have had to change their trade name or run the risk of competitors
and "knock-offs" incessantly piggybacking off of the source
identification or recognition that the trade name had generated in the market
place. It is not a stretch to say that those companies may not have survived
unless they changed the trade name.

Deceptive
marks are permanently unregistrable. Deceptively misdescriptive marks are also unregistrable, but can be registered upon showing of secondary meaning. A "deceptively misdescriptive" mark
immediately conveys a false idea of the goods or services it identifies. TMEP §
1209.04. It is not a death knell to a mark if it misdescribes goods or services
it identifies. To be deceptively misdescriptive, consumers who encounter the
mark on or in connection with the goods or services must be likely to believe
the misrepresentation. Id. I commonly
see this when proprietors want their business to be identified with the green
revolution, and the goods or services they provide are not energy-efficient or
"green" at all. Depending on how a prospective trademark examiner
would decide a consumer's likelihood of believing the misrepresentation, the
mark is either unregistrable or permanently unregistrable.